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How to Develop your Business: Guest Post by Dale Crosby

Today we have a guest post from the Dale Crosby who has a wealth of experience advising the leaders of accounting firms how to develop their business.

Why is it so difficult to turn capacity into advice?

The recent 2017/18 Bstar Accountants Research Report once again highlighted the need for accountants to ‘get away from low profit compliance clients,’ pointing out that ‘it’s easy to be busy, it’s not easy to make money.’ The push towards lowering the cost and increasing the efficiency of compliance through outsourcing and technology is not slowing. Firms that fail to lower their internal costs will see their profit continuing to decline as compliance services become more commoditised and fee sensitive.

The strategic response to this industry change is to continue to provide compliance services as efficiently as possible and to make use of increased capacity to provide more value added advisory services. In theory, this makes sense, in practice accounting firms are really struggling to convert capacity into advice. Principals, partners and managers – the people at the coal face of client relationships – still seem to be struggling to engage better with their clients. They’re unable to find the time, they’re not sure what to say and they don’t always understand how to convert the advice they give their clients into fees.

So, how can the leaders and managers of accounting firms actually achieve the changes they’re looking for in the way they engage with clients?

1. Simply make more time to meet with clients out of the office

In any professional services firm, there will always be reasons to sit at the desk, answer phone calls, respond to emails, address staffing needs and deal with other operational issues. Unless you make time to communicate consistently with clients, nothing will change. Commit at the beginning to 1 day per week out of the office, seeing clients and talking about their general financial goals and needs. Do the same with your professional partners. And stick to this commitment.

2. Ensure that additional capacity is not taken up with more compliance work

Of course, it’s easy to continue doing what we’ve always done. It requires real effort to take time out to think and plan. And this applies to all of our staff. Behavioural change starts with clear direction from leaders, with KPIs aligned to the firm’s core purpose and values. Set specific targets for advisory work, decide how this work will be implemented in the firm and provide coaching and training to your team. Of course, there will be an initial cost, but you simply have no choice if you want to develop a stronger advisory focus.

3. Develop core advisory services that can be effectively leveraged

It’s pointless putting extra effort into identifying new advisory work if the responsibility for delivering this work rests solely with the senior people within your firm. Their time is limited and they will very quickly resist any additional work if they feel overloaded. Start with services that can be leveraged. Consider specialist services that can be provided consistently to your clients e.g. succession planning and strategic planning. Or put in place a process of regular financial reporting and strategic review for your clients, with most of the groundwork delegated to your team.

Finally, measure all of the processes and actions that go towards transitioning to advice. These monthly KPIs may include:

The available capacity to undertake advisory work

The value of ad hoc and ongoing advisory work

The number of client meetings (out of the office)

The turnaround time associated with compliance matters

Client and job profit reports

Anecdotally, it likely that accounting firms can achieve 20% or more improvement in the efficiency of compliance work through outsourcing and technology. Whilst you can, you should be using this additional time to really start engaging with your clients and your professional partners.

Reduce Costs and Eliminate Staffing Headaches

Call 1800 889 232

Is outsourcing necessary to take on a stronger advisory focus? – Guest Post by Dale Crosby

For years, there’s been consistent discussion about the value of outsourcing in helping accounting firms to focus on advisory services. The idea is that by taking away compliance work from our staff, more capacity and time is made available to focus on value added work.

Certainly, the uptake of outsourcing services by all sizes of firms has increased significantly in recent years as firms focus on improving the efficiency of administrative and tax compliance services. Combined with cloud technology, outsourcing has certainly lead to reduction in the cost of day to day tax compliance work.

At the same time, there’s been some positive movement on the advisory front. However most accounting firms are still struggling to convert the extra capacity created by more efficient compliance processes into value-added advisory work. The latest Business Fitness Good Bad Ugly benchmark report (2016) showed that most firms are unable to get business and financial advisory fees above 15% of total revenue.

The feedback I receive from many firms is that the ‘extra capacity’ created by outsourcing and increased efficiency of compliance work is hard to identify. Staff say that they are working as hard as they have in the past. Attempts by partners to create greater leverage stutter along despite the availability of some really clever software tools to help with analysis of data and delivery of advice. Advisory work is still largely provided on an ad hoc basis when clients request support.

Clearly, the journey to a stronger advisory focus is a challenging one for many firms. I believe that outsourcing is a key step in making the transition to a stronger advisory focus. However, it will not deliver the results firms are looking for without a significant change in the motivated interests and behaviour of the people within your firm.

It’s clear that in many cases the increase in capacity is simply giving your people the opportunity to do ‘more of the same’ rather than developing analytical capabilities and communication skills required to develop relationships and add value to client relationships.

What can the leaders of progressive firms do to convert the additional capacity created by the efficient outsourcing of compliance and administrative work into a stronger advisory focus?

1. In recruiting future staff, focus on their communication skills and an understanding of the real world as much as their technical capabilities. The latter can be developed through learning and coaching, the former is much more difficult to teach. I’m seeing progressive firms achieve results by focusing on employing staff with strong reporting and analytical skills. These are the capabilities that sustainable firms will need in the future.

2. Critically review the measurements used to assess the performance of your people. Of course, the efficiency of production is important for revenue and profit, but it has little or no direct correlation with the value of services provided to clients. No wonder our staff resist changing their behaviour if they see little or no benefit for them in doing things differently. A focus on performance indicators relating to client contact and communication will become increasingly important for accounting firms with a strong advisory focus.

3. Paradoxically, the best way to free up your time to focus on quality client relationships is to delegate the administrative and compliance relationship with clients to other people within your team. It’s almost impossible to wear both your tax compliance and advisory hats at the same time. Create capacity for yourself and use that capacity to get out to talk with clients and professional networks.

Recently, I had a discussion with the CEO of a progressive accounting firms struggling to create both the capacity and the capability for advisory services within the business services team. Interestingly, the same firm was achieving success with their financial advisory services team.

The CEO believed that the best way forward was to accept that, for the majority of his accountants, the move from tax compliance to a stronger focus on client relationships and advice was simply ‘bridge too far.’ Instead, he suggested that a stronger advisory focus was only possible by investing in a group of dedicated people who already had the aptitude and capability to sit in front of clients and discuss issues relevant to their world.

Perhaps the accelerating move towards outsourcing compliance work is the first step in actually changing the motivated abilities and capabiities of staff we recruit and develop at a local level with advisory services (rather than tax compliance) in mind.

Dale specialises in change management and has a specific interest in client communication and integration of compliance, business advisory and financial advisory services within accounting firms. He has over 15 year’s experience working directly with accounting and financial advisory firms to achieve growth and profit. “I’m passionate about working closely with accounting and advisory firms to improve their performance. I particularly enjoy working with professional firms to develop the strongest possible relationship with their clients through the development and implementation of business and financial advisory services.”